During the COVID-19 pandemic, life sciences investment surged, with biotech stock valuations and IPO funding peaking in 2021. However, investment has declined significantly, leading to tightening R&D belts and streamlined project pipelines to retain financial headroom for key programs.

The Need for Thinking Differently

Life science venture capital has remained above pre-pandemic levels due to platform-led innovations like machine learning. However, biotech should rethink its approach to derisking R&D, as recovery in sector investment is pending.

A Risky Business

risky business
Risky Business

Biotech faces financial risks due to

  • Uncertain funding
  • High development costs
  • Limited productivity due to small pipelines
  • Regulatory hurdles due to rapid development of new technologies and methodologies

Biotech faces significant risks from lead asset failure in clinical development, with 90% of investigational medicines failing. Partnering in proof of concept and mid-stage trials is risky, with a 70% failure rate. Managing risks is crucial for success.

⚡ A Silver Lining

Tighter R&D budgets can encourage strategic thinking, as high attrition rates persist. Leaner times provide an opportunity to evaluate risks and target limited resources more effectively.

➕ Statistical Solutions

Engaging with a statistician early in a project can maximize development budget by sizing the project, prioritizing spend based on study impact, and determining the best investment.

They can also help differentiate your proposition to investors, evaluate clinical, statistical, and operational risks, prioritize asset indications, and identify the most efficient study design, overcoming recruitment issues, minimizing patient burden, and improving compliance.

Statisticians are now viewed as absolutely critical for efficient and effective drug development (Rockhold, F. W, 2000).

The focus on the process of discovery and development should (and has) put more emphasis on design of experiments and programmes in the non-clinical as well as the clinical arena. Thus, the statistician is crucial in leading researchers through the logical steps in the development process. The statistician is now involved in the full range of pharmaceutical research activities: discovery; non-clinical and clinical development; health economics; portfolio management, and manufacturing. More importantly, they participate in the strategy for development, design of the development plan itself, consult on decision criteria and risk management (Rockhold, F. W, 2000).

💵 Winning over Investors

The Biotech sector, despite recent challenges, remains resilient and a key player in life science innovation.

To secure financing and reduce risk, it is crucial to consult a statistician to present a compelling investment case and navigate the economic climate.

Interesting References

Bretz, F., & Greenhouse, J. B. (2023). The Role of Statistical Thinking in Biopharmaceutical Research. Statistics in Biopharmaceutical Research15(3), 458–467. https://doi.org/10.1080/19466315.2023.2224259

Rockhold, F. W. (2000). Strategic use of statistical thinking in drug development. Statistics in Medicine, 19(23), 3211–3217. doi:10.1002/1097-0258(20001215)19:23<3211::aid-sim622>3.0.co;2-f 

Sebastian G. Huayamares, Melissa P. Lokugamage, Alejandro J. Da Silva Sanchez, James E. Dahlman, A systematic analysis of biotech startups that went public in the first half of 2021, Current Research in Biotechnology, Volume 4, 2022, Pages 392-401, ISSN 2590-2628, https://doi.org/10.1016/j.crbiot.2022.09.004.

Tsai W, Erickson S. Early-stage biotech companies: strategies for survival and growth. Biotechnol Healthc. 2006 Jun;3(3):49-53. PMID: 23424362; PMCID: PMC3571061.